(how often) Does Nadex change their $ ratios?

#1

I am wondering how often Nadex change their binary ratio costs. Or is it/will it always be algorithmic based on demand of Nadex users?

  1. Change in ratios during a given time, i.e. straddle cost differences.

  2. Change in regard to decay, i.e. as it gets closer to expiration.

Thanks.

#2

Nadex does not change the prices. Nadex is an exchange that facilitates transactions between a buyer and a seller which includes market makers and other traders.

As the market moves the price of the deriviative will change, as time moves the price will change, as implied volatility the price will change, if a trader post a limit order better than a market maker post bid/ask spread (inside it) then that will also change the price making the bid/ask spread even tighter. So the answer is price is always changing as price, volatility, time or traders all impact the price. But don’t get overly complex on it… focus on what matters… :slight_smile:

The price itself is not based on demand as it is not a “stock” or “future” but rather it is a derivative of a future or forex etc…

The spreads use a simple black scholes model like call and put options

#3

Some videos on spread movement

#4

A couple videos on binary price change that highlight the important points.

#5

Another one

#6

Another one on spreads and price movement

#7

Thank you for the response. That is very helpful.